Company Law and Secretarial Practice

Unit 6 – Company Meetings

Topics covered under this chapter

•Meetings • Essentials of a Valid Meeting • Valid Quorum• Sense of the Meeting •Methods of Voting •Minutes – Relevant Provisions• Types of Company Meetings for

Directors, Statutory, AGM and

EGM• Adjournment of Meetings • Resolutions – Types of

Resolutions

Introduction to Meetings

• A meeting is generally defined as ‘’a gathering or assembly or getting together of a number of persons for transacting any lawful business’’.

• There must be atleast two persons to constitute a meeting. • Therefore, one shareholder usually cannot constitute a

company meeting even if he holds proxies for other shareholders.

Introduction to Meeting• The company expresses its will or takes its decisions through

resolutions passed at validly held Meetings.

• The primary purpose of a Meeting is to ensure that a company gives reasonable and fair opportunity to those entitled to participate in the Meeting to take decisions as per the prescribed procedures.

•General Meetings of the Members provide a platform to express their will in regard to the management of the affairs of the company.

Conditions/Requisites of a Valid Meeting

• Proper Authority – The proper authority to convene a general meeting of a company is Board of Directors who should pass a resolution to call the meeting, at a duly convened Board Meeting.

• Quorum of Meetings – The quorum is generally fixed by the Articles. Quorum means the minimum number of members who must be present in order to constitute a meeting and transact business. If the quorum is not present, there is no meeting and the proceedings held are invalid.

Conditions/Requisites of a Valid Meeting

• Notice of Meeting – Proper notice of the meeting should be given to the members by giving at least 21 days notice in writing to the members.

• Chairman of Meetings – A Chairman is necessary to conduct a meeting.

•Minutes of Meeting – Every company must keep a record of all proceedings of every meeting.

Legal Essentials for a Meeting1. Notice – It is a legal communication about the day, date, time and venue of

the meeting. There should be 21 days clear notice to hold a meeting.

2. Agenda – It refers to the business to be transacted and the matters to be discussed at the meeting. Usually, the agenda is built into the notice itself.

3. Quorum – It refers to the minimum number of members who must be present at a meeting in order to constitute a valid meeting. Any meeting without the minimum quorum is invalid.

4. Proxy – Where a member is not able to personally attend a meeting, he can depute another person to attend the meeting on his behalf.

Legal Essentials for a Meeting5. Chairman – Chairman is the head of the meeting. In his absence, the members present in person at the meeting elect one of themselves to be the acting chairman for the meeting.

6. Voting and Demand Poll – Matters are decided at a general meeting by a show of hands. If the majority of the members raise their hands in favor of a particular resolution, it is taken as passed.

7. Amendment – It means any modification to a motion before it is put to vote for adoption. It may be proposed by any member who has not already spoken on the main motion or has not previously moved an amendment.

8. Adjournment – It means suspending the proceedings of a meeting for the time being so that the meeting may be continued at a later date and time fixed in that meeting itself at the time of such adjournment or to decide later on.

Valid Quorum• It refers to the minimum number of members who must be present at a meeting in order to

constitute a valid meeting. Any meeting without the minimum quorum is invalid.

• A meeting without the minimum quorum is invalid and decisions taken at such a meeting are not binding.

• The articles of a company may provide for a quorum without which a meeting will be construed to be invalid.

• Usually for Public Limited Companies, One third of total strength or two directors, whichever is higher, shall be the quorum for a meeting.

• For the purpose of determining the quorum, the participation by a director through Video Conferencing or other audio visual means shall also be counted.

Valid Quorum

Publ

ic C

ompa

ny

─ 5 members personally present if the number of members as on the date of meeting is not more than 1000; ─ 15 members personally present if the number of members as on the date of meeting is more than 1000 but up to 5000; ─ 30 members personally present if the number of members as on the date of the meeting exceeds 5000. Pr

ivat

e Co

mpa

ny

─ 2 members personally present, shall be the quorum for a meeting of the company.

Methods of Voting

• Voting by Show of Hands (Section 107) –

At any general meeting, a resolution put to the vote of the meeting shall in the first instance be decided on a show of hands. A declaration by the Chairman of the meeting of the passing of a resolution or otherwise, by show of hands shall be conclusive evidence of the fact of passing of such resolution or otherwise, unless a poll is demanded before or immediately on declaration by Chairman.

Methods of Voting

• Voting through Electronic Means (Section 108) –

Every listed company or a company having five hundred or more shareholders may provide to its members facility to exercise their right to vote at general meetings by electronic means. A member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system. It may be noted that ‘voting by electronic means’ or ‘electronic voting system’ means a ‘secured system’ based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favor or against, such that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate ‘cyber security’.

Methods of Voting

• Demand for Poll (Section 109) –

Before or on the declaration of the result of the voting on any resolution on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion and shall be ordered to be taken by him on a demand made in that behalf.

The demand for a poll may be withdrawn at any time by the persons who made the demand. The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken.

Methods of Voting

• Postal Ballot (Section 110) –

As per section 2(65) “postal ballot” means voting by post or through any electronic mode.

The Act provides that a company shall in respect of such items of business as the Central Government by notification declare shall be transacted only by postal ballot.

Rule 22 provides with regard to conducting business through postal ballot.

Minutes – Relevant Provisions

• As per section 118(10) every company shall observe Secretarial Standards with respect to General and Board Meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act 1980 and approved as such by the Central Government.

• Rule 25 contains provisions with regards to minutes of meetings. A distinct minute book shall be maintained for each type of meeting namely:

(i) General meetings of the Members(ii) Meetings of the Creditors(iii) Meetings of the Board(iv) Meetings of the Committees of the Board

Minutes – Relevant Provisions

• Minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

• Minute books of general meetings shall be kept at the registered office of the company. Minutes of the Board and committee meetings shall be kept at the registered Office or at such other place as may be approved by the Board.

• Minutes books shall be preserved permanently and kept in the custody of the company secretary of the company or any director duly authorized by the Board for the purpose and shall be kept in the registered office or such place as the members may decide by passing special resolution pursuant to requirement of section 88 read with section 94 of the Act.

Minutes – Relevant Provisions

• Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed by:

A. In the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting; B. In the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose; C. In case of every resolution passed by postal ballot, by the chairman of the Board within the aforesaid period of thirty days or in the event of there being no chairman of the Board or the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.

Types of Company Meetings

• The meetings of a company under the Companies Act, 2013 can be classified as under:

1. Meetings of the Directors and their Committees 2. Meetings of Shareholders: (a) Annual General Meetings (AGM) (b) Extraordinary General Meetings (EGM) (c) Class Meetings. 3. Meetings of Debenture/bond holders 4. Meetings of the Creditors otherwise than in Winding Up 5. Meeting of Creditors and Contributories in Winding Up. 6. Court Convened Meetings.

Types of Company Meetings

2. Meetings of Shareholders:

(a) Annual General Meetings (AGM) – It is an important annual event where members get an opportunity to discuss the activities of the company. Section 96 provides that every company, other than a one person company is required to hold an annual general meeting every year.

(b) Extraordinary General Meetings (EGM) – All general meetings other than annual general meetings are called extraordinary general meetings. All business items that can be transacted at the extraordinary general meetings are special business.

(c) Class Meetings – They are meetings which are held by holders of a particular class of shares, example, preference shareholders. Such meetings are called when it is proposed to change the rights of that particular class of shares.

Adjournment of Meetings • Adjournment means to defer or suspend the Meeting to a future time, either

at an appointed date or indefinitely or as decided by the members present at the scheduled Meeting. For a valid adjournment of a General Meeting, the holding of the Meeting at its scheduled time is necessary.

• A duly convened Meeting should not be adjourned arbitrarily by the Chairman. The Chairman may adjourn a Meeting with the consent of the members and shall adjourn a Meeting if so decided by the members.

• The Meeting may, however, be adjourned at any time. It may be adjourned after some items of business have been transacted and the remaining items can be transacted at the adjourned Meeting.

Adjournment of Meetings • Where a Meeting is unlawfully adjourned by the Chairman thinking that he is

not likely to succeed in his object, the remaining Members possess the right to continue the Meeting and conduct the business left untransacted by the Chairman.

• If a Meeting is adjourned for a period of less than thirty days, in the case of listed companies with more than 5,000 Members. Notice thereof specifying the day, date, time and venue of the Meeting should be published immediately in a newspaper having a wide circulation within such States of India where more than 1,000 Members reside.

• At an adjourned Meeting, only the unfinished business of the original Meeting should be considered. If any new business has to be transacted, a fresh Meeting must be duly convened.

Resolutions – Introduction• A resolution is the legal form of a decision taken at a meeting and it could

be on any business or company related subject

• It is a corporate action, sometimes in the form of a legal document that will be voted on or has been voted on at a meeting of the board of directors for a corporation

• Individuals act on behalf of the corporation by passing resolutions

• It is one of the important means or mediums for taking critical decisions at a company

Types of Resolutions1. Members Resolutions

• Sec 282 – Ordinary Resolutions – Resolution passed by a simple majority of the members of the company. A written resolution is passed by the simple majority of the total voting rights of eligible members of the company.

• Sec 283 – Special Resolutions – Resolution passed by a majority of not less than 75% of the total voting rights of eligible members of the company. It is passed as special resolution as it is for a specific reason and purpose suggested by members of the company.

Types of Resolutions2. Directors Resolutions

• Collective Decision making – A general rule about decision making by directors is that any decision of the directors must be a majority decision at a meeting.

• Unanimous Decision making – A decision of the directors is taken in accordance with its articles when all eligible directors indicate to each other by any means that they share a common view on a matter. It may take the form of a resolution in writing, signed by each eligible director in the meeting.